JP Morgan’s problems over its synthetic credit hedges are ballooning beyond the potential $2 billion in losses disclosed last week, with The Wall Street Journal reporting the Department of Justice is on the case.
The news broke on the same day that JPM held its annual meeting and CEO and Chairman Jamie Dimon kept his title as chairman after the proxy vote.
There has been a movement among some big investors to force boards to split the role of CEO and Chairman in order to provide a check on the power of the CEO.
U.K. regulators were already asking questions about JPM’s trades in derivatives hedging against interest rate risk.
While Dimon and JPM’s problems continue to play out, a savvy financial guy told The Mines today the real lesson in this is to ask questions when things look terribly good. He pointed out JPM got a $5 billion lift a couple of years ago from the same trading group and someone in management should have been asking someone to explain that.
After all, big rewards come from big risks, no?
In other JPM news, the CFTC posted notice that whistleblowers who tipped them off to JPM’s failure to properly handle Lehman Brothers segregated customer accounts. JPM settled the allegations in April agreeing to a $20 million fine.
Whistleblowers can file to collect what some in the business refer to as a bounty within 90 days of today’s notice.
